By my estimate, the value of our home has declined 25-30% since we purchased it in 2003. Fortunately, we're not homeowners who borrowed against the increased equity of our home when prices peaked in 2007. In fact, we had down payment of 40% with a plan to pay off the mortgage early, which we did in 2009.
While I am disappointed in the decline of our home value, the decline won't have much impact on our near term retirement finances since we aren't paying a mortgage nor do we expect to sell the home in the next couple years. That should give our home sufficient time to recover to at least its original value.
I'm hoping that housing will recover sufficiently for the home to at least double in value by the time our daughter graduates from college in 15 years. By then, interest rates should be higher also which would potentially make an annuity an attractive option to consider.
For more on The Practice of Personal Finance, check back every Wednesday for a new segment.
This is not financial or retirement advice. Please consult a professional advisor.
Copyright © 2012 Achievement Catalyst, LLC
I am still quite fascinated with the people who are borrowing against their only house.
ReplyDeleteThis prime residence and there is no mortgage against, it should not even be on the balance sheet.
Unless there is great emergency the family still needs a home.